It is no wonder why people are in a gloomy state of mind regarding our real estate market. Everywhere you look it is the cover page of newspapers and magazines...."Housing market in the worst slump ever!" You turn the news on in your car or on the TV at home and they are talking about it in the first five minutes right after reporting 0n the terrible news story about the cyclone wiping entire villages killing tens of thousands - you get my point. In last Wednesday's San Francisco Chronicle the front page had a headline "Prices of homes are falling faster - The Mortgage Meltdown - Bay Area values plummet 17% in February - rapid decline means the bottom is probably far off". Reading that headline of a whopping 17% drop and the first few paragraphs leaves homeowners, buyers and sellers feeling the doom and gloom of our housing market.
Rather than getting bored with reading the same old story of doom and gloom...I actually read the entire article. I got past the opening sentence of "Like a brick falling from the top of the Transamerica Pyramid, national and local home prices are rapidly accelerating on their way down, crushing hopes of an imminent turnaround." Nothing depressing about that right? To my surprise the story took quite a turn about 3/4 of the way through.
The article mentions a key factor that tends to not be mentioned in many news reports, so I thank the writer, James Temple for pointing this next fact out - "The indexes represent the overall price trend in specific metropolitan areas. Many of the cities or neighborhoods within these regions performed far better or far worse. San Francisco, for instance, eked out a median price increase in March, but the rare positive examples were more than offset by the tumbling values in outlying areas, like eastern Contra Costa County." It brings out that Alameda, Contra Cost, Marin, San Francisco and San Mateo counties are all grouped in the San Francisco region and there are reports that there is the "sixth highest annual drop and the biggest month-over-month decline, 5 percent". That is low compared to other spots such as Las Vegas dropping 22.8%, Miami 21.7% and Phoenix 20.8%.
Scattered midway in the article, some bursts of sunshine shone through! The article brought out that homes priced above $756,420 have largely retained their value (only suffering a 6.8% fall). Many homes are in that price range on the Peninsula and San Francisco Bay Area. Whereas low priced homes under $513,218 have dropped roughly 33% since February 2006.
The article concluded on a positive note saying that "The San Francisco index was at 174.54 in February, meaning despite the recent turmoil, values are up nearly 75 percent from eight years ago." Hopefully people who started to read that article actually read all the way through...so they could get a good idea of the housing market conditions we are facing...and see why the doom and gloom daily reports from the media may not mean your neighborhood too!
